Reliance Communications and Maxis, which owns Aircel, had already agreed to a preliminary 50:50 ownership structure in the event of a merger, and the two operators are now finalising commercial and legal terms. The deal will provide RCom with an additional INR15 billion in annual revenue.

The resulting entity would have around 188 million mobile connections – 9 million more than RCom’s current total - knocking Idea Cellular’s 174 million connections into third place. RCom has a market share of almost 10%, while Aircel has around 8.5%. The merged entity would still tail behind market leader Bharti Airtel (250 million connections) and number two Vodafone India (197 million).

The joint entity is expected to take the form of a wireless unit comprised of Aircel and RCom’s spun-off wireless branch, which will receive a debt transfer of INR14 billion ($208 million) from each party. The merged entity will use a new brand name and will not be listed for its first few years of operation, and RCom will retain its tower and overseas units.

In addition to the proposed merger, RCom has been forming spectrum sharing and trading agreements after the rules on these practices were relaxed last year by Indian regulator TRAI. RCom formed an arrangement with newcomer Reliance Jio in January, with the latter firm buying 800MHz spectrum from RCom across nine regions as well as sharing bandwidth in the same frequency band across 17 telecom circles.